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Mamba vs Lara (GR No 165109 Dec 14, 2009)

Facts: The Sangguniang Panlalawigan of Cagayan passed Resolution No. 2001-272 authorizing
Governor Edgar R. Lara (Gov. Lara) to engage the services of and appoint Preferred Ventures
Corporation as financial advisor or consultant for the issuance and flotation of bonds to fund the
priority projects of the governor without cost and commitment.

Petitioners Manuel N. Mamba, Raymund P. Guzman and Leonides N. Fausto filed a Petition for
Annulment of Contracts and Injunction with prayer for a Temporary Restraining Order/Writ of
Preliminary Injunction against Edgar R. Lara and others.

At the time of the filing of the petition, Manuel N. Mamba was the Representative of the 3rd
Congressional District of the province of Cagayan while Raymund P. Guzman and Leonides N.
Fausto were members of the Sangguniang Panlalawigan of Cagayan. Edgar R. Lara was sued in
his capacity as governor of Cagayan, while the other respondents were sued as members of the
Sangguniang Panlalawigan of Cagayan. The respondents filed an Answer with Motion to Dismiss,
raising as a defense that the petitioners are not the proper parties or they lack locus standi in
court.

The RTC decided in favor of the respondents and dismissed the petition to annul the contract,
ruling that the petitioners had no locus standi to file the petition as they were not parties to the
contract.

Issue: W/N the parties have locus standi to sue in court?

Held: YES.

A taxpayer is allowed to sue where there is a claim that public funds are illegally disbursed, or that
the public money is being deflected to any improper purpose, or that there is wastage of public
funds through the enforcement of an invalid or unconstitutional law.

A person suing as a taxpayer, however, must show that the act complained of directly involves the
illegal disbursement of public funds derived from taxation. He must also prove that he has
sufficient interest in preventing the illegal expenditure of money raised by taxation and that he will
sustain a direct injury because of the enforcement of the questioned statute or contract.

In other words, for a taxpayers suit to prosper, two requisites must be met:

(1) public funds derived from taxation are disbursed by a political subdivision or instrumentality
and in doing so, a law is violated or some irregularity is committed and
(2) the petitioner is directly affected by the alleged act.

In light of the foregoing, it is apparent that contrary to the view of the RTC,a taxpayer need not be
a party to the contract to challenge its validity. As long as taxes are involved, people have a right
to question contracts entered into by the government.

In this case, although the construction of the town center would be primarily sourced from the
proceeds of the bonds, which respondents insist are not taxpayers money, a government support
in the amount of P187 million would still be spent for paying the interest of the bonds. In fact, a
Deed of Assignment was executed by the governor in favor of respondent RCBC over the Internal
Revenue Allotment (IRA) and other revenues of the provincial government as payment and/or
security for the obligations of the provincial government under the Trust Indenture Agreement
dated September 17, 2003. Records also show that on March 4, 2004, the governor requested
the Sangguniang Panlalawigan to appropriate an amount of P25 million for the interest of the
bond. Clearly, the first requisite has been met.

As to the second requisite, the court, in recent cases, has relaxed the stringent "direct injury test"
bearing in mind that locus standi is a procedural technicality. By invoking "transcendental
importance", "paramount public interest", or "far-reaching implications", ordinary citizens and
taxpayers were allowed to sue even if they failed to show direct injury. In cases where serious
legal issues were raised or where public expenditures of millions of pesos were involved, the
court did not hesitate to give standing to taxpayers.